The Federal Financial Institutions Examination Council (FFIEC), on behalf of its members, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration, released proposed guidance on December 17 relating to reverse mortgage products. The guidance is designed to help financial institutions ensure that their risk management and consumer protection practices adequately address the compliance and reputation risks raised by reverse mortgage lending.
The proposed guidance addresses the general features of reverse mortgage products, relevant legal requirements and consumer protection concerns raised by reverse mortgages. The proposed guidance focuses on the need for banks, thrifts and credit unions to provide clear and balanced information to consumers about the risks and benefits of these products. According to the FFIEC, such information should be provided while consumers are making decisions about these products and should address the specific matters listed in the guidance, including informing consumers of available alternatives to reverse mortgages. The proposed guidance also states that institutions should require that consumers receive qualified independent counseling and take steps to avoid any appearance of a conflict of interest. The proposed guidance addresses related policies, procedures, internal controls and third-party risk management.